Good post, Bbeenn. I didn't think much of the 13.6% until you...

Good post, Bbeenn.

I didn't think much of the 13.6% until you mentioned the comparables, especially the Ivanhoe project. Makes you wonder what risk premium they've assumed for Garatau. It confirms on page 37 they're using "the Group's estimated weighted average cost of capital" and since Zijin is largely financing projects with government funding at an extremely low interest rate, one would expect a lower discount rate to reflect the low, after tax, cost of borrowing...

To shed more light on the extreme sensitivity of a discount rate... Just as an example, a $1,000,000 cash inflow in year 30, using 13.6%, has a present value of $21,809. Whereas, at a 8% discount rate (Kamoa project) the PV of that same cash flow is $99,377... LOOK AT THE DIFFERENCE. They may be using an inflated discount rate to help justify a lowball offer... no thanks.

1000000/(1.08^30)